It's called the Little Blue House, and hundreds of abused and neglected D.C. children have lived there in the past eight years, getting medical treatment and specialized care. But the acclaimed nonprofit foster care program in Northwest Washington has been closed for business since June, after a sexually transmitted disease was diagnosed in a 2-year-old boy.

Little Blue House officials said they have evidence the toddler was sexually abused before he was brought to their facility. Their employees have cooperated with authorities, they said, but the group home's future has been put in doubt by the District's receiver for child welfare services, police, the D.C. corporation counsel and other agencies.

The group home, managed by the Boarder Baby Project, won glowing evaluations for its round-the-clock care, extended to six babies and small children at any given time. Its 20 paid staff members have been out of work since the shutdown, and its executive director, Carl Foster, accused investigators of failing to act aggressively to resolve the issue.

"No one has made an attempt to determine who molested the child," he said, contending government officials have shown nothing but "ineptitude."

Foster said he has yet to get an explanation from receiver Ernestine F. Jones why all the children were removed from the home June 24--six weeks after the boy's disease was diagnosed. Nor has he been able to figure out who is controlling the investigation. The other five children in the home were tested and showed no signs of sexually transmitted disease, he said, and his employees have undergone testing voluntarily to show they are disease-free.

"The problem with this is the people who are being victimized happen to be innocent," Foster said. "Ex-nuns went to their doctors and asked to take tests for sexually transmitted diseases, and so did grandmothers."

Coming at a time when the receiver's office is being criticized over financial management and services for the District's 3,128 foster children, the group home's situation illustrates the challenges in sorting out allegations of abuse involving youngsters in the District's care.

The process is complicated by the number of steps involved: Police conduct the investigation; the corporation counsel provides legal advice; the U.S. attorney's office decides whether charges are warranted; and the receiver ultimately determines what to do about the children and care provider.

The Little Blue House, in the 500 block of Irving Street NW, cares for low-birthweight babies and other small children until they are healthy enough to move into permanent foster homes. Foster and his board members are unpaid volunteers who manage the operation with roughly $250,000 from the D.C. government and $350,000 from foundations and other private donors.

"All of our kids are fragile," Foster said. "They come to us malnourished. They're dirty, every one we get. Even the healthy ones have issues."

The facility has a good track record, according to previous evaluations done for the District. In May 1998, a government monitor reported the Little Blue House had an experienced and dedicated staff that provided a homelike atmosphere that exceeded expectations. Three months later, a member of the receiver's staff wrote a fund-raising letter on the program's behalf. In June of this year, two days before the children were removed from the home, a government monitor reported to the facility that he had found no problems with the house.

The current dispute involves a boy who was taken into the District's custody in March after allegations he had been beaten by a member of the family that was caring for him. The boy was examined at Children's Hospital for numerous bruises. The hospital was under no legal obligation to screen him for a sexually transmitted disease and didn't do so; at the time, there were no accusations involving sexual misconduct. A social worker took the youngster from the hospital to the Little Blue House, arriving at 5 a.m. March 22.

In mid-May, staff members noticed redness in the boy's genital area and took him to a doctor, Foster said. The sexually transmitted disease, chlamydia, was detected. Foster said the staff arranged to have the other five children staying in the home tested, too, and none of them showed any signs of any sexually transmitted diseases.

Jones, who was appointed by a federal judge to oversee the District's child welfare agency, said she had no choice but to remove all the children from the Little Blue House and await results of the police investigation.

"My responsibility is to ensure those children are, in fact, safe and protected, and that's what was done," she said. "I am not free to make any further determination with regard to future utilization of that facility until we get the report back from the police establishing what the finding was."

Police officials declined to comment on the investigation, saying the matter is still pending. The others involved in the process--the corporation counsel and the U.S. attorney--are waiting for the police to complete the probe.

Sources familiar with the matter said the two detectives involved have had other matters to investigate, too, and acknowledged they weren't focused on the case initially. Detectives since have been told to put a priority on figuring out what happened to the boy, who because of his age has been of little assistance. One law enforcement source said the police have no suspects and are attempting to identify everyone who had contact with the child at the Little Blue House as well as at the homes in which he had lived previously. Police also are reviewing medical records in what has become a time-consuming endeavor, the source said.

Foster said he and his board members have tried to get answers since the children were removed June 24, to no avail. He said he has no indication any of the house's staff members is under suspicion. The law enforcement source confirmed that police have no reason to believe anyone in the Little Blue House abused the boy and said the source of his disease remains a mystery.

Frustrated with the pace of the investigation, the Little Blue House hired its own private investigator. Lewis J. Neuwelt interviewed the child's mother and various caregivers and reported that the evidence he uncovered suggested the child had been sexually abused well before he wound up at the Little Blue House.

The Little Blue House also hired an infectious disease specialist who questioned the findings that the boy had chlamydia. And the Little Blue House has hired lawyers in an attempt to push the case toward a resolution.

Tom Wells, director of the Consortium for Child Welfare, an umbrella group of D.C. caregivers, said the receiver and other D.C. officials have an obligation that goes beyond waiting for the police report. Someone must take charge of the process, he said, and demand a timely answer.

"It's just an unconscionable way to treat anyone," Wells said. "The staff and volunteers at Little Blue House have been kept hanging out there without knowing why. In this case, it seems they've been left totally in the dark because everyone is afraid to take responsibility. . . . We've just about wiped them out and we've lost a good program and a nice resource for kids."

The police might conclude they don't have enough information to file charges against anyone. Regardless of how the investigation unfolds, Jones said she will decide whether to again send children to the Little Blue House.

Foster said he's convinced authorities are stalling. "Innocent or guilty, they should be able to make a determination in less than four months," he said. "No matter what the truth is, it's four months later and they don't even have a clue. This house has been closed since June 24th. Here it is the middle of October, and the only thing the woman responsible for the children can say is, 'I'm waiting for the police'?"